In a note on Tuesday, Alan Ruskin, global head of G10 FX strategy
at Deutsche Bank, wrote that the cloud has lifted on six key
concerns investors had about the global economy.

"Since the most obvious manifestation of 'risk on', is the
S&P break to new highs, US equities are probably the most
direct places to participate in the 'risk on' trade," Ruskin
wrote.

"Ideally a weekly S&P close above the 2,135 previous high
would clinch this crucial bull signal," he said.

The index climbed to as high as 2,155.90 on Tuesday.

Here are the six issues Ruskin identified:

The strong June
jobs report released on Friday showed that the US economy is
not spiraling into a recession.

The People's Bank of China performed a "stealth
devaluation" of the yuan to support its economy after the UK
referendum. This showed that the bank can achieve a stable
dollar-yuan rate without shaking up global markets, as long as
it appears to be in control.

The Brexit could be hugely damaging to the EU
and the UK, but it has not proved to be so for the rest of the
world.

The
Italian banking crisis — characterized by a surge of bad
debts — is small enough to be solved fairly easily by
politicians if they agree on the right solution.

Japan's fiscal policy, or at least its prospect, has excited
markets and could serve as a key litmus test for how effective
the alternative to monetary policy is. But even if this kind of
policy to stimulate Japan's economy flops, Prime Minister Shinzo
Abe's initiatives are back on the table following his ruling
coalition's majority win in Sunday's elections.

Hillary Clinton has a solid lead in the polls, and that's a
plus for the status quo, following a massive political surprise
like the Brexit.

These are some of the main factors that have helped push the
market to new highs this week.

But in the same note, Ruskin wonders how long this
will last.

That's because even as stocks have rallied to new highs,
global bond yields, including those on US Treasurys, have tumbled
to record lows. And despite the economy's strength, investors are
signaling that they don't expect the Federal Reserve to
raise interest rates again until 2018.

"Something has to give — either the risk rally is
hopelessly misplaced or Fed rate expectations are," Ruskin
said.

In other words, investors' expectations for the Fed to
remain accommodative with ultralow rates paint a worse picture of
the economy than the rally in stocks does.

"The US front-end looks extremely vulnerable," Ruskin said,
referring to short-term bond yields. "This is also the factor
most apt to eventually slow/stop the risk rally and support the
USD."